TMI Blog2013 (6) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... that in course of the appeal proceeding the CIT (A) in fact had sought the comments of the AO on the issue but the AO did not respond to it - Against revenue. Direction of the CIT(A) not to add disallowable interest while computing MAT - AY 2006-07 - Held that:- A reading of the provision contained u/s 115JB makes it clear that the basis for computation of book profit is the net profit as shown in the profit and loss account and which maybe increased by the items prescribed in item (a) to (i) and reduced by items (i) to (viii). Therefore any of the items which are to be added for arriving at the book profit must fall within the items specified under the explanation. Sec. 115JB being a self contained provision, one has to go strictly by the provision contained therein. Since the additions made by the AO to arrive at the book profit are outside the purview of items enumerated under explanation I to section 115JB, the computation made by the AO is legally unsustainable. Accordingly uphold the order of the CIT (A) and dismiss the grounds raised by the department. - ITA Nos. 396 &397/Hyd/11,1691/Hyd/10 - - - Dated:- 31-5-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e made preferred an appeal before the CIT(A). 5. In course of hearing before CIT(A) the assessee contended that the conclusion arrived at by the Assessing Officer to the effect that the assessee had advanced excessive interest bearing funds to its sister concerns is not correct as in reality sister concerns have given more advances to the assessee . It was submitted that while the sister concerns have the balance of Rs.71,56,59,009/- the assessee has advanced Rs.68,28,56,200 to the sister concerns, hence no disallowance can be made. The CIT(A) after considering the submissions of the assessee in the light of the materials on record allowed the claim of the assessee and deleted the additions by concluding as under:- "The submission made by the authorized representative has been considered. It is seen that for the asst. year under consideration, the appellant company is seen to have received/purchases at Rs.71,56,59,009 against the appellant company's payments/sales at Rs.68,28,56,200. Accordingly, the appellant company enjoys the purchases/receipts from the sister concerns with the excess difference balance of Rs.3,28,02,809. It is seen from body of the assessment order that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivable. He further submitted that, in fact, the advances to the sister concerns are not loans but trade advances as the assessee has business connection with sister concerns. In this context, the learned AR invited our attention to page 31 of the paper book-II. It was further submitted, that the assessee had enough reserve and surplus to make advances to the sister concerns without having to divert the borrowed funds. In support of his contention the learned AR relied upon the following decisions:- i) DCIT V/s. Agarwal Global Steel Ltd. (141 ITD 76) ii) SA Builders Ltd. V/s. CIT (288 ITR 65 (SC) iii) Munjal Sales Corporation V/s. CIT (298 ITR 298)(SC) 8. We have considered the contentions of the parties and perused the materials on record. We have also examined the documents submitted in the paper books. From the material on record it is quite evident that the assessee has not only given advances to its sister concerns but has also received advances from them. From the account of one of the sister concern i.e., Kedia Vanaspati Ltd., it can be seen that there is a credit balance of Rs.3,28,02,809/- with the assessee. It further reveals that the assessee had regular business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,04,436/- and after set off of brought forward losses total income under normal provision was determined as Nil. The Assessing Officer however while computing MAT added the aforesaid amounts to the book profit declared by the assessee. 12. The assessee challenged such action of the Assessing Officer before the CIT (A). It was contended by the assessee before the CIT (A) that interest disallowance and unexplained investment cannot be added u/s 115JB to arrive at the book profit. In support of such contention, the assessee also relied upon the following decisions:- 1. Apollo Tyres Ltd. (255 ITR 273) (SC) 2. A.B. Hotel Ltd. (Radisson Hotel) V/s. DCIT 25 SOT 368 (Delhi) 3. DCIT V/s. Roxy Investments (P) Ltd. 24 SOT 227 (Delhi) 4. ACIT V/s. GVK Industries Ltd. 21 SOT 295 (Hyd) 5. Ajanta Pharma V/s. CIT CIT 327 ITR 305 The CIT (A) after considering the submissions of the assessee in the light of the decisions relied upon by the assessee directed the Assessing Officer not to add the disallowable interest for computing MAT. 13. We have heard rival submissions and perused materials on record. A reading of the provision contained u/s 115JB of the Act makes it clear that the b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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